Social Exclusion and Consumer Switching Behavior: A Control Restoration Mechanism

This research examines the effects of social exclusion on consumers’ brand and product switching behavior. We find that consumers who perceive themselves as chronically or temporarily excluded exhibit more switching behavior, compared with their peers who do not feel socially excluded. This effect is mediated by a decreased sense of personal control after social exclusion. And this effect diminishes when there are other resources compensating the desire for internal control (e.g., when there is efficient external control), or when the incumbent option possess the function of maintaining social belongingness (e.g., when the incumbent option is socially conformed or symbolizes social connection).

29.11.2016

Hagit Perry

UC Berkeley

Optimal Pricing when Trying and Forgetting affect Demand Using the Retail Coffee Market in the US at a unique period

This paper develops an empirical model that examines the problem of finding the optimal long-term pricing in competition, where consumers gain information through trying products, but gradually forget the gained information.
Many markets practice a behavior of cyclic sales, where brands in the market reduce their prices for limited time periods and return the prices to the previous levels in a cyclic manner. Literature has attributed this pricing behavior to the dynamics of consumers' trying and forgetting effects and these were studied both theoretically and empirically. However, a complete system that connects the demand estimations to the brands' behavior was examined in theoretical setting only, in monopoly and duopoly market structures.
This paper builds a model that includes both demand and supply sides. It estimates a discrete choice based system that includes heterogeneous effects. Then the demand estimands are taken to the supply side, where the outcome of an infinite dynamic game using the equilibrium concept is simulated. Using a unique data and market settings allows the identification of the trying and forgetting effects and the results of the estimation are consistent with previous literature.
The pricing system, which optimizes profits, contributes both to the literature and to practitioners as it does not only finds the sales schedules and lengths, but also provides the optimal pricing for each brand and for each period of time along the dynamic game in equilibrium.
Moreover, the suggested model and technique does not limit the number of agents, consumer types, periods, and states of the dynamic game.
In addition, the paper estimates market shares and profits when the trying and forgetting dynamics are added to the demand and supply models, and it shows that considering these effects has a great value to brands and especially to brands that enter mature markets.

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06.12.2016

Crolic,Cammy Leigh

SAID Business School, University of Oxford.

Influencing Those Who Influence Us: The Role of Expertise in the Emergence of Minority Influence

While consumers are often influenced by experts, consumers themselves can be experts—and, in such instances, it is important to understand who influences their decisions. That is, to whom do experts turn to for guidance in their own decisions? In response, the present research proposes the rather paradoxical hypothesis that, while novices are more influenced by majority endorsements, experts are more influenced by minority endorsements. This hypothesis is based on the premise that novices are motivated to base their evaluations on the convention, whereas experts are motivated to base their evaluations on the innovation. These motives are important, as we propose majority endorsements reflect what is normative, prototypical, and conventional, whereas minority endorsements reflect what is counter-normative, novel, and innovative. In support of this argument, four experiments demonstrate that: (i) experts and novices are differentially influenced by minority and majority endorsements, (ii) this effect is driven by a heightened diagnosticity of the endorsement, and (iii) this diagnosticity is rooted in different inferences conveyed by minority and the majority endorsements (innovation versus convention, respectively). This research, then, offers novel insight into the role of social influence in impacting the decisions of experts and, consequently, the role of expertise in the emergence of minority influence.

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13.12.2016

Joachim Vosgerau

Bocconi University

Revisiting the Vice-Virtue Categorization in Theories of Self-Control

In the consumer behavior literature, self-control conflicts are often operationalized as choices between vice and virtue foods. Vices - for example chocolate - are hedonic foods whose consumption is tempting (immediately gratifying) but bad for one’s well-being in the long run. Virtues - for example fruit - are utilitarian foods whose consumption is little appealing in the moment but good for health in the long run. This characterization of self-control conflicts as a choice between hedonic vices and utilitarian virtues implies that it should be almost impossible to enjoy food: A self-controlled consumer would choose to consume only utilitarian foods, a non-self-controlled consumer would choose hedonic foods whose consumption is accompanied by feelings of guilt and regret. This paradox is resolved by realizing that consumers tend to categorize foods a-priori as good (virtues) or bad (vices) irrespective of how much is consumed. The consumption of a food, however, becomes deleterious only when it is excessive. Recognizing the paradox and its resolution bears fundamental implications for theories of self-control and their empirical tests, the measurement of self-control, cross-cultural differences in the perception of self-control, licensing and what-the-hell effects, and interventions aimed at helping consumers exert self-control.

27.12.2016

MI 2016

03.01.2017

Coby Morvinski

Interdisciplinary center (IDC)

“Ten Million Readers Can’t Be Wrong!”, or Can They? On the Role of Information about Adoption Stock in New Product Trial

Most new-product frameworks in marketing and economics as well as lay beliefs and practices hold that the larger the stock of adoption of a new product, the greater the likelihood of additional adoption. Less is known about the underlying mechanisms as well as the conditions under which this central assumption holds. In a series of field and consequential choice experiments I demonstrate the existence of non-positive and even negative effects of large adoption stock information on the likelihood of subsequent adoption. The results highlight the degree of homophily with the adopting stock as well as the level of customer uncertainty as key characteristics determining the nature of the effect of stock information. In particular, information about a large existing adoption stock generates a positive effect on adoption only under moderate customer uncertainty combined with sufficient homophily; in other levels of uncertainty and/or homophily the effects range from null to negative. This is the first direct test and demonstration of the intricate role of information about a large stock of adoption in the new product diffusion process, and carries direct implications for marketers.